This Backtrack, Such a Setback

Context: The repeal of farm laws is not just bad sense, but also shows a gaping chink in Modi sarkar’s armour.

Recent initiatives of government to reform agriculture

• GoI had promoted micro irrigation, soil health cards and neem-coated urea.
  • Micro-irrigation: make irrigation more efficient by delivering small quantities of water to roots of plants. 
  • Soil health cards give farmers information that enables them to use fertilisers more efficiently.
  • Neem-coated urea is released more slowly into fields and is absorbed more efficiently by crops.
• GoI has compensated farmers for poor crops under the Fasal Bima Yojana and raising of minimum support prices (MSP) have been raised.
  • Rs 1 lakh crore is supposed to have been distributed under Fasal Bima Yojana.
• Conception of e-mandis: where people have computers to buy and sell agricultural goods.
• Promulgation of three farm laws: First law permitted farmers to sell anywhere, and not just in government-approved mandis. 
  • Second allowed them to make contracts to sell produce in advance, usually at the time of planting a crop. 
  • Third law removed GoI’s power to limit stocks held, for example, by traders. 
• Creation of modern market mechanism through rejuvenating private markets: These markets will determine prices, market participants will make guesses of future trends, and stock or destock depending on their expectations of future prices.

Issues associated with agri reforms

• Unwillingness on part of farmers to buy reforms: Farmers were used to the government buying up crops, and releasing them — or locking them up. 
  • They think that GoI used market controls to keep prices up, and they like that
• Structural issues: Indian food grain prices have been mostly higher than international prices .As GoI accumulated millions of tonnes of unsaleable food grain.
• Insufficient data on beneficiary of these reforms: Government claimed that thousand mandis have been turned into e-mandis. But, questions remain who are real beneficiary among farmers, traders, speculators. And,
  • Which crops have they been trading? How much during months following harvests and how much at other times?
  • Distributed amount under Fasal Bima Yojana was a 40th of the value of agricultural production in a year, and less if it was distributed over a longer period.

Way forward:

• Replace present half-controlled prices with market-determined prices: As,India has a food grain surplus, and needs to shift from grains to other crops that can be exported.
• Intelligent planning over years to make farmers richer, more educated, more entrepreneurial.

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